nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2005‒06‒05
eleven papers chosen by
Marco Novarese
Universita del Piemonte Orientale

  1. Organizational and Cognitive Duality of the firm with community concept By Frédéric CREPLET; Olivier DUPOUET; Francis KERN; Francis MUNIER
  2. New Firms Evolving in the Knowledge Economy; problems and solutions around turning points. By E. Stam; E. Garnsey
  3. Introducing Procedural Utility: Not only What, but also How Matters By Bruno S. Frey; Matthias Benz; Alois Stutzer
  4. ‘Just Forget It’: Memory Distortion as Bounded Rationality By Bruno S. Frey
  5. Can the human mind learn to backward induce? A neural network answer. By Leonidas Spiliopoulos
  6. Reported Subjective Well-Being: A Challenge for Economic Theory and Economic Policy By Alois Stutzer; Bruno S. Frey
  7. Moral Suasion: An alternative tax policy strategy? Evidence from a controlled field experiment in Switzerland By Benno Torgler
  8. Is Trust a Bad Investment? By Nava Ashraf; Iris Bohnet; Nikita Piankov
  9. Social comparisons in ultimatum bargaining By Iris Bohnet; Richard Zeckhauser
  10. How Does Marriage Affect Physical and Psychological Health? A Survey of the Longitudinal Evidence By Chris M. Wilson; Andrew J. Oswald
  11. Why do Academic Scientists Engage in Interdisciplinary Research ? By Nicolas CARAYOL; Thuc Uyen NGUYEN THI

  1. By: Frédéric CREPLET; Olivier DUPOUET; Francis KERN; Francis MUNIER
    Abstract: On the basis of the recent concepts of epistemic communities and communities of practice, we show that the firm can be defined according to a form of double duality: cognitive and organisational. The interest of this approach is to put ahead the differentiated behavior from the manager and the entrepreneur inside the firm. It also puts in light the important questions concerning the organisational tensions under the vision of the knowledge-based economies.
    Keywords: Creation of knowledge - Learning process - Routines – Community of Practice – Epistemic Community – Knowledge conversion modes – Knowledge management
    JEL: L20 L21 L23 M11 M12 M13 M14
    Date: 2004
  2. By: E. Stam; E. Garnsey
    Abstract: This paper explores and explains the emergence and growth of new firms in the knowledge economy. The resource-based view, capabilities approach, and evolutionary economics are used as a foundation for a developmental approach. The development of the firm is conceptualized in terms of processes that include opportunity recognition, resource mobilization, resource generation and resource accumulation, which lead to the development of competences and capital in a base made up of productive, commercial and financial resources. Problems originating within or outside the firm may deplete the productive, commercial and asset base, leading to turning points in the life course of these firms. These have negative consequences when problems are not solved, but positive consequences when they lead to new solutions and the development of new competence. The empirical study shows that even in an elite sample of young fast-growing firms, most firms face turning points in their life course, and thus do not grow in a continuous way. The study shows that quantitative growth indicators do not always reveal growth problems that have been faced by new firms. Some problems do not negatively affect the employment growth of the firm, and other problems are solved before growth stagnates. The qualitative analysis shows that young firms are almost always in disequilibrium: there is almost never a perfect match between the constituents of their resource base, between input resources and requirements for expansion. This explains why continuous growth is so unlikely. Although every firm seems to grow in a unique manner, there is evidence for the presence of a limited set of necessary mechanisms for the growth of (new) firms, which work out in particular ways given the specific context and history of these firms.
    Keywords: New firms, firm growth, theory of the firm, resource based view, firm life course, organizational crises, knowledge economy
    JEL: D21 D92 L23 M13 M21
  3. By: Bruno S. Frey; Matthias Benz; Alois Stutzer
    Abstract: People not only care about outcomes, they also value the procedures which lead to the outcomes. Procedural utility is a potentially important source of human well-being. This paper aims at introducing the concept of procedural utility into economics, and argues that it should be incorporated more widely into economic theory and empirical research. Three building blocks of a concept of procedural utility are outlined and it is suggested how procedural utility can be fruitfully integrated. Evidence from a broad range of social sciences is reviewed in order to show that procedural utility is a relevant concept for economics.
    Keywords: procedural utility; outcome utility; institutions.
    JEL: A00 A12 D60 D70
    Date: 2003–07
  4. By: Bruno S. Frey
    Abstract: Distortions in memory impose important bounds on rationality but have been largely disregarded in economics. While it is possible to learn, it is more difficult, and sometimes impossible, to unlearn. This retention effect lowers individual utility directly or via reduced productivity, and adds costs to principal-agent relationships. The imprinting effect states that the more one tries to forget a piece of information the more vivid it stays in memory, leading to a paradoxical outcome. The effects are based on, and are supported by, psychological experiments, and it is shown that they are relevant in many economic situations and beyond.
    Keywords: Memory; bounded rationality; learning; retention; ironic process theory; principalagency theory
    JEL: D11 D83 J2 M20 Z00
    Date: 2004–06
  5. By: Leonidas Spiliopoulos (University of Sydney)
    Abstract: This paper addresses the question of whether neural networks, a realistic cognitive model of the human information processing, can learn to backward induce in a two stage game with a unique subgame-perfect Nash Equilibrium. The result that the neural networks only learn a heuristic that approximates the desired output and does not backward induce is in accordance with the documented difficulty of humans to apply backward induction and their dependence on heuristics.
    Keywords: behavioral game theory; neural networks; learning
    JEL: C7 D8
    Date: 2005–05–30
  6. By: Alois Stutzer; Bruno S. Frey
    Abstract: Over the past few years, there has been a steadily increasing interest on the part of economists in happiness research. This paper argues that reported subjective well-being is a satisfactory empirical approximation to individual utility and endeavors to provide an impression of this new, and challenging, development. We study data from the German Socio-Economic Panel to better understand (i) the role of aspirations in the relationship between income and happiness and (ii) the effect of unemployment on people’s satisfaction with life. We discuss some of the consequences for economic policy and for economic theory.
    Keywords: aspiration level; relative income; subjective well-being; unemployment; utility
    JEL: D60 I31 J60
    Date: 2003–07
  7. By: Benno Torgler
    Abstract: In a controlled field experiment in Switzerland this paper analyses the effects of moral suasion on the timely paying and filling out of the tax form 2001, and the honesty regarding the declaration of domestic income from capital gains, lottery winnings, and certain insurance benefits. Comparisons of different tax filling years and multiple regression estimations have been done using these three factors as dependent variables to check if there is a significant difference between the control group and the treatment group, controlling for additional factors that might influence compliance behaviour. In February 2002 the treatment group received a letter signed by the commune’s fiscal commissioner containing normative appeals. Results indicate that moral suasion has hardly any effect on taxpayers’ compliance behaviour. The strongest effect can be observed for the variable tax payments.
    Keywords: tax compliance; morale suasion; field experiment
    JEL: H26 H71
    Date: 2004–01
  8. By: Nava Ashraf; Iris Bohnet; Nikita Piankov
    Abstract: This paper examines whether trust is an investment decision under uncertainty, based on the expectation of trustworthiness, and whether trustworthiness is reciprocity, conditional on one’s counterpart’s behavior. In trust experiments in Russia, South Africa and the United States, two thirds of the subjects who trust do not expect trust to pay monetarily. We find substantial heterogeneity in motivation: Expectations of return account for most of women’s trust, and reciprocity for most of Americans’ trustworthiness. Men’s trust and Russians’ and South Africans’ trustworthiness are significantly related to unconditional kindness as measured by subjects’ behavior in dictator games, us ing a within-subject design.
    Keywords: Trust; kindness; reciprocity; gender; cross-cultural experiments.
    JEL: C72 C91
    Date: 2004–05
  9. By: Iris Bohnet; Richard Zeckhauser
    Abstract: This paper employs experiments to examine the effects of social comparisons in ultimatum bargaining. We inform responders on the average offer before they decide whether to accept or reject their specific offer. To provide a metric for social comparison effects, we compare them with another change in informational conditions, asymmetric information on the pie size. Knowing comparable offers or knowing the pie size increases offers and rejection probabilities by similar magnitudes. Our results are consistent with people disliking deviations from the norm of equity but inconsistent with fairness theories, where people dislike income disparity between themselves and their referents.
    Keywords: Experimental bargaining; social comparisons; asymmetric information; ultimatum game.
    JEL: C91
    Date: 2004–06
  10. By: Chris M. Wilson (University of East Anglia); Andrew J. Oswald (University of Warwick, Harvard University and IZA Bonn)
    Abstract: This paper examines an accumulating modern literature on the health benefits of relationships like marriage. Although much remains to be understood about the physiological channels, we draw the judgment, after looking across many journals and disciplines, that there is persuasive longitudinal evidence for such effects. The size of the health gain from marriage is remarkable. It may be as large as the benefit from giving up smoking.
    Keywords: mortality, health, marriage, happiness, longitudinal
    JEL: I0 I12
    Date: 2005–05
  11. By: Nicolas CARAYOL; Thuc Uyen NGUYEN THI
    Abstract: This article provides a first empirical study of the determinants of the propensity to which academic scholars tend to perform interdisciplinarity research. For that purpose we introduce a measure of interdisciplinarity as the diversity of their research production across scientific domains. Our dataset concerns more than nine hundred permanent researchers employed by a large French university which is ranked first among French universities in terms of Impact. As expected we find that the traditional academic career incentives do not stimulate interdisciplinary research while having connections with industry does. The context of work in the laboratory (size, colleagues’ status, age and affiliations) strongly affects the propensity to undertake interdisciplinary research.
    Keywords: Economics of science, Academic incentives, Interdisciplinary research, Laboratory, University.
    JEL: L31 O31 O32 O34 O38
    Date: 2004

This nep-cbe issue is ©2005 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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